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Housing market still struggling

First time buyers having to provide bigger deposits

Figures released by the Council of Mortgage Lenders suggest that the average deposit required to be put down to secure a mortgage is now 16% of the property value. However, the best rates can only be secured from the banks and building societies if customers can put forward a 40% deposit.

These new levels of deposits required to secure a mortgage is highly unrealistic for many first-time buyers. Those who can get a deposit together however are encouraged to wait before entering in to the property market, with house prices expected to fall further.

Repossessions still a real problem

Alistair Darling announced on Monday in the Pre-Budget report that banks were to be forced to give homeowners who are struggling with mortgage repayments a three month grace period. However, many existing high street mortgage providers offer such a grace period already, making Mr Darling's move of little value to struggling homeowners.

Mr Darling has offered some relief to those struggling with mortgage payments, with alteration to the support scheme currently offered for homeowners who have lost their job. Darling announced a reduction in the period between losing a job and being able to claim income support, from 39 weeks to 13 weeks. The Chancellor also increased the financial aid available by announcing that the support would cover interest payments on mortgages up to the value of £200,000.

Repossessions are also causing issues for those renting, with many landlords falling behind their mortgage repayments, putting tenants at risk. The Association of Residential Letting Agents (ARLA) has confirmed that the private renting sector is being reviewed as it is widely considered that the current system is not satisfactory.

Bank charges still increasing

Research by MoneyExpert.com has revealed that the cost of bouncing cheques due to overdrafts being exceeded and interest rates on agreed overdrafts have gone up since last year, despite the drop in interest rates.

Lord Mandelson to force banks to offer loans

If banks fail to adhere to the new codes of practice for lending that will be put in place, they will run the risk of being subject to legal action. The government will also demand access to banks lending books so that they can monitor banks lending.

The banks next year are forecasted to take in more through mortgage repayments than the money they lend out through new loans. This could result in further downward pressure on house prices.

 

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